Hiring Your First Contractor

Hiring Your First Contractor

If you’re getting ready to flip your first house and now you’re hiring your first contractor…you’re in for a real treat.  It will be a crash course, and life lesson all rolled into one.  In fairness, most contractors are dedicated professional who will do they best job they can, but there are some out there who are not so scrupulous.  Hiring a contractor for the first time can be intimidating there’s a lot of money on the table and for most flippers, it’s not your money you’re playing with either.  Since your profit depends on the contractor doing his job well, let’s explore some tips to make the experience a positive one.

Check References

Your contractor should be able to provide easily references for you to check and if they can’t move on.  You need to look online for reviews as well, check sites like Google, Yelp and Angie’s List to get a better idea of their work.  You need to make sure they will show up on time and do the job properly.

Get it in Writing

Make sure to get any and all bids in writing.  As nice as it would be to do business with a smile and a handshake, there is too much potential for miscommunication.  A contract outlines exactly what is expected of both parties and should there be a dispute in the future you have the written agreement to fall back on.

Hiring Your First Contractor

Make Sure Your Contractor is Licensed and Insured

As the property owner, you are ultimately responsible for what happens on your property.  Insurance and licensed are the cost of doing business for a contractor and they should be able to show that to you without issue.  Make sure the information is accurate and up to date before they even begin working on your property.  An unlicensed contractor can end up costing you a fortune in liability and fees should something go wrong.

Watch the Money

One of the biggest fears in hiring a contractor is that they won’t show up when they are supposed to, and the other is they suck money out of the project that you can’t afford to spend.  The only real way to stop this from happening is a contract that spells out payment schedules.  Don’t release final payment until the job is completed.  Releasing payment before the job is done doesn’t offer much of an incentive for the contractor to complete the job quickly and if they decide not to finish at all you’re stuck paying for the work twice.

Most contractors are honest, hardworking people trying to make a living, just like you.  Having clearly defined expectations in place right from the beginning can ensure the project runs smoothly and is profitable for both of you.

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Myths About House Flipping

House Flipping

Lots of real estate investors get into flipping houses for the profit, but soon find out that it’s pretty rewarding too.  There is nothing like taking an old house that is a neighbourhood eyesore and turning it into a showpiece for a young family.  If you do some of the construction work yourself then you know grabbing a sledgehammer and starting demolition is a great way to vent some frustrations.

House Flipping

All of that aside, house flipping has seen enormous popularity in the past decade or so part of that is due to the potential money you can make.  Another reason is the ever popular reality shows featuring both first-time flippers and experienced real estate investors.  The problem with many of the reality shows is that while they make it look like fun, and it can be, they perpetrate some of the myths surrounding what it is really like to flip a house and work with contractors and banks.  So here are some of the myths dispelled for you.

You can’t flip a house when you don’t have ton of cash.

Newbies to the world of house flipping believe that you can’t flip a house without having sufficient funds of your own.  This isn’t necessarily true; money does make it easier, but money is all around you.  You can work with a partner, several of you can pool your money together to flip a property.  There are loans, finance companies or investors…where there is a will, there is a way.

You need to be handy or have construction experience.

The idea behind house flipping is to buy a house, renovate it and then sell it.  It does not mean you have to take on all of these tasks personally.  Being handy will save you money, but there are tasks you cannot do.  When it comes to plumbing and electrical, you need to work with a contractor.

Most experienced house flippers work with contractors; it gets the work done quicker and time is money in the real estate game.  Contractors have the professional expertise you can tap into making the flip faster and more profitable.

There is a process for flipping.

Well, less of myth and more of a half truth.  Flipping is buying, fixing to add value and then selling for profit.  There is no set formula as to how you do this, and each house is different some will only need paint while others will have to be gutted down to the studs and rebuilt.

Flipping a house means you must sell it.

Yes, the general idea is to sell for a profit, but again nothing is written in stone.  Flipping can be a very risky business and you may find the market has changed while the house was being renovated and renting may be more feasible.  You may decide you like the house and want to live in it yourself.  Do whatever makes the most financial sense for your investment.  Whether you decide to live in it or not it is still an investment.

If you’re ready to get started flipping your first house but aren’t sure where to begin here are some tips to get you started.

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